Europe June benzene prices ease amid production restarts, imports

15 June 2012 12:03[Source: ICIS news]

LONDON (ICIS)--Following nearly two months of pricing volatility owing to availability restrictions and continued production outages, the European benzene market in June appears to be easing off as imports from both Asia and the US Gulf arrive, sources said on Friday.

While unconfirmed, the various production outages that have plagued the European market since May are also said to be coming to an end.

It is also understood that one producer is intending to switch on its hydrodealkylation (HDA) unit, converting toluene into benzene, in order to help supply the domestic market.

“There is some light at the end of the tunnel,” one trader said.

Despite softening crude and energy prices since early May, the European benzene market had proven resilient to this volatility due to balanced supply levels.

Production had been curtailed earlier in the year, and imports diverted away from ?xml:namespace>Europe, owing to weak pricing. Lower pyrolysis gasoline (pygas) output from crackers has also helped to tighten benzene availability in May.

Prompt pricing in particular soared from May into June, with numbers reaching $1,400/tonne (€1,106/tonne) and above while downstream styrene remained below $1,350/tonne and even fell below $1,300/tonne this week.

Many players felt that styrene prices should have been lower given that Brent futures have remained below $100/bbl, and that the spike in benzene had helped support the market, albeit at a lower level than its feedstock.

However, with news that production was set to resume at several aromatics units, June benzene spot levels fell back below $1,300/tonne again towards the end of the week, with bids as low as $1,265/tonne although offers were reluctant to follow.

July has remained steadily backwardated by at least $120-150/tonne throughout the recent turbulence - an indication that the spike in pricing was always temporary as opposed to structural.